BOJ meeting; Nikkei at 33-year highs; Hong Kong rebounds

Singapore’s consumer prices rose more than expected in December, according to official data.

December CPI rose 3.7%, more than a Reuters poll estimate of 3.5%. It was higher than the 3.6% rise in November.

Singapore core CPI in December rose 3.3% compared with expectations of 3.1%.

Housing, food, cultural and recreational segments saw the biggest rise, while clothing and footwear price growth cooled.

The Monetary Authority of Singapore is expected to keep its policy intact when it releases its policy statement later this month.

— Shreyashi Sanyal

The Bank of Japan expectedly retained its ultra-loose monetary policy at its first meeting this year, while cutting its core inflation forecast for the next fiscal year.

The BOJ decided unanimously to keep interest rates at -0.1%, and stuck to its yield curve control policy that keeps the upper limit for 10-year Japanese government bond yield at 1% as a reference, according to a policy statement released Tuesday, following a two-day meeting.

In its quarterly outlook on the Japanese economy, BOJ board members lowered their median growth forecast for core consumer prices — which it defines as inflation that excludes food prices — to 2.4% for fiscal 2024 starting this April, compared with 2.8% they estimated in October.

All the economists surveyed by Reuters expected the Japanese central bank to maintain its negative rate policy this month — making the BOJ the world’s only central bank with negative rates. Governor Kazuo Ueda is scheduled to explain this decision in a press conference later this afternoon.

Read the full story here.

— Clement Tan

Chinese authorities are considering a package of measures worth 2 trillion yuan ($278.53 billion) to stabilize its stock markets, Bloomberg reported.

Citing people familiar with the matter, Bloomberg reported that this would come from the offshore accounts of state-owned enterprises.

Chinese Premier Li Qiang recently chaired a meeting of the country’s cabinet, which called for taking “stronger, more effective measures to stabilize the market and improve market confidence.”

Hong Kong’s Hang Seng index jumped 2%, powered by tech stocks, but the mainland Chinese CSI 300 was marginally below the flatline.

— Lim Hui Jie

Stocks in Hong Kong surged Tuesday, with the Hang Seng index jumping more than 3% after two straight days of declines.

Shares of technology companies led the advance in beleaguered Hong Kong markets — Asia’s worst performer last year — pushing the Hang Seng Tech index up nearly 5%.

Shares of NetEase jumped 5.23%, Alibaba rose 4.43%, Tencent gained 4.12% and Bilibili advanced 8.3%.

The Hang Seng index had fallen nearly 14% in 2023, declining for a fourth straight year.

Property stocks were also higher on Tuesday, with Longfor Group jumping nearly 10%, Logan Group up 5.7%, and Country Garden gaining 6.56%.

South Korea’s producer price index rose 1.2% year on year in December, accelerating from the 0.6% rise in November.

On a month on month basis, producer prices rose 0.1%, reversing from the 0.4% fall in November.

Separately, the country’s PPI increased 1.6% for the whole of 2023, a sharp slowdown from the 8.4% rise for 2022.

— Lim Hui Jie

Bitcoin, the world’s most popular cryptocurrency, fell decidedly below $40,000 for the first time this year.

It was last trading at $39,690, according to Coin Metrics, in early Asia trading Tuesday, also weighing down smaller peers including Ethereum.

Bitcoin has fallen 14% since Jan. 10, the day the SEC allowed ETF trading for the cryptocurrency. Ether, which has been outperforming bitcoin, has gained 3% during the same period.

“Bitcoin’s month-long stay above the psychologically important $40,000 level ends unceremoniously as the approval of ETFs has been met by a ‘sell-the-news’ wave compounded by capital flight from GBTC (Grayscale Bitcoin Trust),” said Antoni Trenchev, co-founder of digital asset company Nexo.

“It feels like Bitcoin investors are running up a descending escalator right now as traditional financial benchmarks enjoy the easier ride to record highs. This period where Bitcoin has to sprint to stand still might well last a few weeks as locked-up GBTC investors finally get an opportunity to exit their positions.”

The Grayscale Bitcoin Trust ETF is the world’s largest, with over $25 billion in assets under management.

CEO of Grayscale Investments Michael Sonnenshein told CNBC last week that most of the approved bitcoin ETFs won’t survive.

Deflation may soon start biting into Chinese growth, as Beijing looks at another three to six months of a “very painful economy,” Shaun Rein, founder of the China Market Research Group said.

“This is something investors need to be cautious of. The economy here is bad, it’s pretty … it’s really bad. I’ve been in China for 27 years, and this is probably the lowest confidence I’ve ever seen,” Rein told CNBC’s “Squawk Box Europe” on Monday.

“So deflation is starting to wield its ugly head. Consumers are waiting for discounts. They’re very nervous.”

In December, depressed prices for pork — which makes up around a fifth of China’s CPI basket — heralded the possible advent of deflation.

Read the full story here.

— Ruxandra Iordache

Barclays has made an upbeat forecast for stocks in 2024, expecting higher, yet more moderate, returns than the exceptional gains of last year.

The investment bank believes stocks still have room to rise if inflation continues slowing, allowing central banks to eventually cut interest rates.

CNBC Pro takes a look at five companies, including Volkswagen, in Barclays’ European “Conviction with Catalysts” list of stock ideas that offer strong upside potential.

Subscribers can read more here.

— Ganesh Rao

Morgan Stanley and JPMorgan named their key China internet picks and the themes to watch right now.

Both Wall Street banks indicated that it will be an alpha-driven market for the sector.

“For 2024, we think an alpha-driven investment strategy will continue to offer good risk/reward,” JPMorgan said in a Jan. 16 note.

Both banks named their preferred names in the sector. All are traded in the United States. One named a “good contrarian long case,” giving it 107% upside.

CNBC Pro subscribers can read more here.

— Weizhen Tan

The S&P 500 may have soared to new heights to close last Friday’s trading session, but HSBC says that investors shouldn’t count on the equity rally to carry on for much longer.

“Under the hood, there are cracks emerging,” wrote analyst Max Kettner. “While it may be tempting to chase the latest all-time highs, we maintain our view of a Reverse Goldilocks episode hitting virtually all asset classes in the coming months.”

As evidence, Kettner pointed to “shakier” activity in markets beyond the U.S. large-cap names driven by the AI frenzy. Small- and micro-caps, high-beta and meme stocks are all down this year, alongside European equities.

Additionally, Kettner underscored that the gains in U.S. large-cap stocks have so far been primarily driven by high-quality names. On the other hand, low-quality names appear to already have begun suffering.

— Lisa Kailai Han

Oil prices rose more than $1 on Monday, after a suspected Ukrainian drone strike on a major Russian fuel terminal placed renewed focus on the threat to crude supplies.

The West Texas Intermediate futures contract for February rose by $1.42, 1.93%, to trade at $74.83 a barrel. The Brent contract for March gained $1.12, or 1.43%, to trade at $79.68 a barrel.

Ukrainian drones struck a Russian fuel processing and export terminal on the Baltic Sea called Ust-Luga, sources in Kyiv told the BBC and The Wall Street Journal.

“The Ukrainian drone attack on the Baltic port raises the question: Is this going to be a policy decision by Ukrainians to attack Russian oil infrastructure,” said Bob Yawger, managing director and energy futures strategist at Mizuho Americas. “If that’s the case, that’s a problem,” Yawger said.

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